Quote:
Originally Posted by Botnst
Here's a portion of an abstract concerning subprime loans. It was another gov do-gooder project.
Community Reinvestment Act ("CRA") as a positive mandate for banks and thrifts to do good by increasing investment in low- and moderate-income ("LMI") neighborhoods. When Congress enacted CRA, it was inconceivable that LMI neighborhoods might eventually receive too much credit in the form of abusive mortgages. However, by the late 1990s, predatory mortgages- exploitative high-cost loans to gullible borrowers-were ravaging the inner cities.
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The CRA's are typically fixed rate, below market rate and helped curb borrowers from sub-prime and other predatory acts for low income borrowers. They did receive more credit due to the decreased cost and interest rates but the house of cards fell when surrounding home values took a dump.